BEWARE OF UNDER-INSURING

By: Insuranzdirect  10-Mar-2009
Keywords: Hairdressers, Wedding Services, Wedding Photography

A company which offers specialist insurance packages tailored specifically for different types of businesses, is warning the hospitality industry against under-insuring business assets. Rob Andrews, marketing manager of the New Zealand-owned commercial insurer, Western Pacific Insurance Limited, says in this more difficult business environment, owners and operators of hospitality businesses are conscious of costs and the annual insurance bill is an expense that comes under scrutiny.

“A major problem in New Zealand is that of under-insuring, where an insured business owner elects to insure his business assets for less than their replacement value. This is principally in order to save a few dollars in insurance premiums,” says Andrews.

Through its online portal, www.insuranzdirect.co.nz, the company offers an alternative to the conventional way of buying business insurance for café, restaurant and bar owners. Insuranz Direct is able to offer discounted premiums, due to its low cost distribution model and the fact there is no middle man, says Andrews.

“Under-insuring is a massive problem, with some 70 per cent of New Zealand SMEs (small-to-medium enterprises) most likely being under-insured,” he says. “A recent loss that we insured is a prime example, the insured had his plant and equipment, fixtures and fittings covered for $300,000, his stock of $30,000 and his ‘business interruption’ for $100,000, when in fact the true replacement cost of his plant, equipment, fixtures and fittings was $900,000, his stock $250,000 and his business interruption limit should have been closer to $500,000 than $100,000.

“The fire was a total loss and the SME business owner now has to attempt to re-establish his business with substantially less resources than he would have if he was fully insured. The difference in the cost of fully insuring and the lower sums that he elected to cover was approximately $3500,” says Rob Andrews.

For the café and hospitality sector, Western Pacific Insurance Ltd has devised several packages offering three levels of cover. He says www.insuranzdirect.co.nz has been developed to take the guesswork out of purchasing insurance.

“Our website offers an instant quote system which allows the customer to decide which level of cover works best for them, and there’s a secure online payment gateway where you have a choice of payment options, including a pay-by-the-month system by way of credit card or direct debit at no extra cost, to help with businesses’ cash flow.

The concept of offering different packages for different types of businesses – not only for the hospitality industry but also for businesses such as hairdressers, florists, tradespeople, DJs and retailers – is that each industry sector has different insurance needs, different hazards and different capital cost structures. “We wanted to provide New Zealand’s hospitality industry with a quick and easy alternative to buying business insurance specifically designed for their particular needs.”

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